polarization within political society, and it seems that it's to parties work very much in parallel and that they are the mayor of each other. so what you have is a political landscape in which accusations are thrown against the other party constantly, another accuses them to be in fact a channel for the old rcd to come back. and they accuse another to impose its hegemony on the political arena. now, what is interesting that when you listen to another's narratives as well as a tune is a narrative, they both see themselves as mass parties, big mass national parties that have as a nation not necessary to

participate in the democratic game, but to shape the preferences of tunisia and to so let's tunisia civil society as it has been a narrative of -- but it is also the narrative of, another wants to islamize tunisian society from the bottom up, but that tunis wants to represent a modernist nationalist ethos. now we're not talk about ben ali but legitimacy, the reference has gone back, and those two parties look at the other one as having undemocratic intentions. and it is very in fact when you look at both parties, it is very difficult to evaluate those intentions. and that's to a thing for both

of them. and so i would like to rebalance a little bit the way those two parties have been presented in particular by the media, and while they are, in fact, confronting each other on the political scene, there is no institution building. that is made, that is shaped. and so in a few days on octobe october 23 we are supposed to have the first draft of the constitution. we don't know what's going to happen after october 23. was a constituent assembly continue its work? that's not sure. but what we see is too big polls, i want to shape society in the way they fit, and two big parties that choose and i think is quite important, the institutions of the old state to shape society as they see fit.

and this is what i think he did not need to ask for sharia to be integrated into constitutional narrative. he doesn't need sharia in the constitution. he has everything he needs in the laws of the united states, because i see them being in great continuity. and for instance, the law, the press law of 1975 is enough to implement any anti-blasphemy laws, for instance. you don't need to implement sharia to go against blasphemy, or even to constraint expression public, freedom of expression. so in a way i'm optimistic, of course, about tunisia but cautiously optimistic. because i think what you see

there is the continuity of the old state. it doesn't seem that there are any intentions to change the institutions of the old state. which, in fact, are very useful for both tunis and another to reshape society for tunis and a modernist direction, and for another in an islamist one. so i will stop here, and i look forward to our discussions. thank you spent thank you very much, malika. that was a model, superb analysis and remedy at the same thing. i also have a sign here that says please continue. i'm not exactly what i use that particular sign. but i'm trying to figure that out. it's rather intimidating. gina, the thing, tunisia was supposed to be a good happy case, and our other colleagues ha been writing about tunisia

talked about how the model had been sort of establish what a contradiction between islamist and secular early on in the process. and now we are reminded that if you have your focus on today's events and you don't see the bigger picture, one can get in some trouble. what's striking of what you said among other things is that the regime is able to go back to a 1975 law and use it to respond and to address its critics and not have to invent other new kind of institution or legal mechanisms to do so. advocates to the question of a better transition we are looking at you. i think that was a real interesting way of framing the issues. you are next, thank you. >> thank you. well, good morning, ladies and gentlemen. when asked to discuss algeria under the rubric of changing politics in a new era, my heart

sinks because of course it's baking the question that things are significant change in algeria. is a changing a lot, really? or not much? if not, and i'm going to do is not changing very much, i want to address the question what's holding this up. i think the west has been impatient without your the last couple of years. algae is the bad pupil, the one that any in his essays on time. it's the exception to the arab spring. of course, i expect most of you to be familiar with the stock answer to question why the extension, and i won't spend time on that. i want to address a different set of issues, to do with the obstacles to change and the missions in the -- all missions that are in my view responsible for the absence of a kind of change that is desirable.

but i been asked to do something else for us which is to go to checklist of questions to do with for instance, government strategies, the presidential succession and so. so i'm going to deal with that first. one of the facts about algeria that is always to be borne in mind is that, of course, is an oligarchy, which means that it's the political problem of voucher is quite unlike tunisia around ben ali or egypt under a site. at an underbelly -- oligarchy which gives it a great deal of flex builder which gives it a range determined by the oligarchies own repertoire. i want to put the word repertoire after because i think the crucial problem of algeria, the absence of disciple change arises out of the limitations of the repertoires of the regime and of the opposition. i'm going to focus on the opposition in a moment. government strategy has been a sophisticated strategy involving

at least five different elements. it's done a lot of flying off of discontent since the rights of january 2011. quite spectacular pay rises, virtually everybody demanded him and everybody did demand them. is allocated a lot of money to fund credits and other investment, small businesses for unemployed youth. for example. second element has been a strategy, the algerians passed math star's, they are geniuses. they develop skills in these fields during the revolution that never deserted him. and they are very good at causing new entrance to the critical stage as a way of stymieing the veteran figures of the opposition. and the elections that were held

this summer were an education precisely for introducing under the aegis of in effect regime sponsorship, a new element of political personnel authorized to found new parties as a way of being put into the political disposition. at the same time it's a regime that doesn't hesitate to make deals even with opposition figures when it decides that that's a smart thing to do. third element is of course the stake -- the stick. it's been striking that while generally seeking to co-opt, bite off, the regime has been taking a very hard line against certain elements of a certain source of unrest, particularly those unemployed to come instead of queuing up to get credit can have actually been demonstrating, demanding jobs.

nuance actually matters on that nuance depends on whether you get a handout or -- [inaudible]. the regime is not interested in really undertaking and you've got a change in economic policy that leads to significant job creation. and, therefore, it's been quite harsh with those elements of the algerian youth demanding that, and campaigning for it. it's also of course been engaging in more or less -- human rights organizations and making life in particular difficult for what is in many respects in my view the most hopeful element on the algerian scene, namely the department of the independent trade unions outside the framework of the corporatist state comptroller general units of algerian workers. the regime can't ban such independent unique but it can make life a try for them, and does so. okay. finally, another element of what

you might call the battle, the stick, is the fact the regime doesn't hesitate to destabilize those opposition figures who considers pose a serious threat to it as he could tell you several tales along those lines, he someone who has been seen by the regime even though he's a perfectly constitutional is, peaceful political figure. he someone who the regime has destabilize repeatedly. and, of course, that knows how to destabilize by organizing internal opposition within opposition parties to bring down the leader of that party. so there's a whole range of things that it's been going at a point gone halfway through his repertoire because there are two of the things we need to bear in mind is, it's still been reading election to the algerians have not got to the point of reading elections legally. think about it. that is actually what, part of

the batter of so-called reforms are put through a year ago, the electoral law actually enable the algerians operating strictly within the terms of that law to rig the election so that it would produce the right results. go into that if people want me to explain how this is done, i take it from me, that's what they have done. they're reading is was sophisticated, and can't really any longer be described as criminal. so there's a problem there. finally, of course tightening up, all of the laws passed a year ago endorsed as reforms by spokesman for western governments, i'm afraid they were of course all pseudo-reforms and they involve substantial tightening up. this was particularly clear in the associations that tightened up in various respects, one of them being concerning the funding of associations by outside sources funding.

another one being that political parties may not have organic links with associations or associations of political parties. that's something that is already present but is reaffirmed. that's one aspect of the decision in algeria. second aspect is of course that innocent algerian medical class all wait for the succession to be resolved. it's due in 2014. if his health holds out until then. and i'm not going to speculate much about this. it's something that occupies a good deal of the political elite, but i think it's important to flag, there may be a serious problem on the horizon insofar as we may be looking at a complicated and complex triple, double succession but it's not just the presidency. the chief of staff is very elderly.

and ahead of the maghreb, is just a couple of years younger. and has been rumored to be unwell. the point is that the presidential succession won't be a problem, won't be too big a problem if the forces that normally arbitrated such matters are in the saddle. but if, in fact, we are saying a multiple succession crisis, then the question arises who are any of the? part of the context of the terrible descent of the violence 20 years ago was the fact you have a complex but not a simple but a multiple succession profit in the algerian elite. that's the context we get a massive aggravation of a faction fighting within the regime. so i'm a little worried about that, possibly of a complex not a simple succession scenario a year or two from now. don't want to be an alarmist homages flagging it as a

possible difficulty. how much longer do i have? really? that's good. i was asked to say something about the military. an important fact about the military of course is that with scarcely any exceptions the entire top echelon now consists of officers who did not take part of the war of liberation. in other words, the military, individual generals do not have a historic revolution legitimacy of the earlier generations of the high demand. -- command. what's at issue is the extent to which the army collectively has legitimacy beyond its specific military defense security functions. to what extent does the army retain political legitimacy to be a political actor. now, over the last eight years, the regular army has been off

center stage. it's been in the wings. by getting rid of the previous chief of staff who overplayed his hand, he has persuaded the regular army to stay out of the political limelight. and that's simple by the problems facing him but it meant that he wasn't the only game. the other was the head of the political intelligence. so the dr, departments of -- [inaudible] which covers the whole of intelligence services, has become more powerful over the last eight years than it was previously. and there's been this polarization if you like within the regime between the presidency and the drs, the two crucial power centers in the executive of the state. what that means is that one

thing that we have to ask ourselves is to what extent the algerian army can make a political comeback. in the event that there is a succession problem in the drs. i think a second aspect of this is the extent to which the drs has grown over the years to a size and to a way to perform a range of functions that arguably is unprecedented. and there's a question where they can actually sustain that or whether there will have to be some process of reining it in and of redistribution of power away from the drs. that's something that i think also could be put on the medium to long-term agenda as a possible issue. what about the opposition? the aspect of what's been happening is the failure of algeria to go with the trend that seemed islamists become the key players elsewhere, in tunisia, egypt and so when.

and dispassionate is not simply a matter of rigging. i think people do need to understand that the islamists moment in a jarret has come and gone. and they're still of course allowed to play the green alliance as it was called, they won 49 seats in election of the summer getting 10 points higher% of the seats. so islamists are still there but i think things that have given them purchase on algerian popular reflected in the past are gone. they mobilized the almonds in the outshooting populist tradition. that's broken. it can't be repaired. people are no longer utopian and military in algeria. they crashed a long time ago. but utopianism was a premise of the islamist salvation ability.

and the problem is that since the utopian formula went, the islamists have not been able to develop a convincing reformist formula. the only one who really had the intellect and vision to do so, and omission of notice noticed that and they just had him off at the past every time he looked as if he was getting somewhere. okay, i've got two minutes and 40 seconds left. right? >> forty-two seconds. >> i just want to hammer a point that no one else is making. because virtually all the westerners focus on the problem of political change in this part of the world, defines the crime as the authoritarian -- i want to insist that a big problem, big part of the problem of the absence of interesting change in algeria are the weaknesses of the opposition, weaknesses that are not simply in effect of the

behavior of the regime. the regime is never repress it. they hardly any political prisoners energy. there's a lot of scope for free debate in the press. algeria is not a very young free place but it is run by an oligarchy and its not well covered and there's a lot of discontent and justifiable discontent about that, but the prof is the so-called opposition our series. you're not really in opposition. what the regime has done since the introduction of pluralism in 1989 is organize a kind of a referee around the core of the oligarchy, a number of dissidents. you've got a lot of different brands of dissidents, the dissidents in a since neutralized each other. a lot of the political composition in algeria is between dissidents jockeying for position, limelight and that extra little marginal increase in seats, and the patch nature that gives the leaders of the dissident parties, leaders who often turn out to be unmovable

and imposition decade after decade. think of the leader of the socialist forces since 1963. and the point is that these opposition parties have no proposition for real reform. they are not seeing anything. they are demanding change, never defining it. reform, never explain what reform. government bound by law, never defining how one gets there, what it really means. and remember, in the 1999 so-called presidential elections, all the other candidates were saying they were in favor of him. not one of the next and what he meant by that or how we get there. so i want to really raise this as an issue, that we have a kind of pseudo-opposition that really is part of a problem. the regime has in a since greater a problem for itself by being a little bit too smart. it's organized this

nonthreatening environment of pluralism, pluralism and that is manipulable, patronized in any sense controlled. but it's actually ultimately useless. and the result, the fundamental reason why algeria is a producing interesting political change, there's all the reason should know about, the fact that any sense it had its arab spring 20 years ago, algerians have a point when the same we been through this movie. we were way ahead of everybody. that's all perfectly true, but the fundamental reason of what is yes, people do not know what to do. of the regime and the opposition have reached the limits of their repertoire. and the western discourse on political change in this region are not suggesting anything useful to them at all. let me leave it there. >> fantastic, thank you very much. hugh as i was been one f the most astute analysts, a very difficult place i know, and he's just a marvelous job of

describing the emergence of algeria's own version of liberalized hypocrisy. and, of course, i think he described what i consider liberalized autocracy ultimately to be, and that is trapped. and how you get out of the trap depends on whether both regimes in opposition can envision something beyond the kinds of dynamics he was describing. so i say this because i think it's an interesting question to ask about morocco, whether the game of state managed liberalization is still this fundamental game or whether morocco might move beyond the. so having said that, i will ask anouar to come up for his presentation. thank you. >> thanks, dan. thanks for inviting me. so, moroccans malaysians include the power, the bgp. like to explain political reforms quite simple terms. the less you change, the easier it is to achieve change. so the great consensus

concerning the perception of balance of power between the major actors in morocco, the more likely a new set of rules can be accepted by all. this is exactly what happens with the uprising in the arab world begun in 2011. so the only important problem after the arab spring reach morocco was to find new bout of political power. the morality was clearly on the defensive, and was forced to look for new allies to expand its support base. in the end, each found the islamists of the pgd as the best partner to weather the storm. so the challenge to the monarchy was solve quite easily. the strongest actor, which is the palace, smartly crafted an explicit set of ambiguous rules and codified in any constitution that looks good on paper.

the distribution between actors changed, though slightly, and the balance of power was recognized by all significant actors. so the new constitution, for example, provides a margin of political maneuverability that did not previously exist. this is what the pgd islamists like to call the third way. but despite its democratic overtones, despite its democratic lenience, the constitution suffers still from some ambiguities. that text can be interpreted differently, depending on the balance of power of the moment. so before now, the third way remains balanced between the palace and the islamists, the pgd. the islamists, pgd, belief that the balance would eventually shift slowly their way.

as the party gains experience, as it puts its mark on social and economic policy. and as he chooses its battles, political battles, judiciously and prudently. the islamists also say the palace cannot afford for the pgd to fail. or backpedal or incremental reforms. so there are three stages to this process, according to the leadership of the pgd, as they put it. the current transition itself, which is reflected by lower levels of democracy, this is, they say, the best of the pgd could hope for, given the lopsided balance of power between it and the regime. as we know, and the income of the transition, those in power are expected to decide reform and goes in a way that favors them. so that's the transition, the

current transition. number two, transitional growth. which is reflected by increased levels of transparency, accountability and the pgd tries to build stronger institutions of government and a robust civil society emerges. and the last step which is democratic and consolidation. such processes would work, again according to the leadership of the pgd in a are attracted slow and way, as everything else in morocco functions. slow, protracted but deliberate. reforms would proceed gradually and incrementally. social transformations, political transformation, economic transformations will proceed or are likely to be accomplished only if they are spaced out over a good deal of time. if they are approach sequentially and if they build upon existing order rather than try to dismantle it.

so slow transitions that are conservatives are more doable than radical transformations. so right now what we have is a political gamesmanship. political game and should the balance by both sides. over the interpretation and over the implementation of the provisions of the constitution. over government appointments, over the reforms of the media, reforms of the judiciary, and over fighting corruption. many of the constitutions as you know still require organic laws. ahead of the government's genuinely believes that the pgd must avoid confrontation with the king. he believes that democracy and progress will not emerge out of the confrontation with the balance. only cooperation will do he said in morocco. so the small changes that the

pgd introduced so far are framed as a positive sum game, in which the party may not obtain its third outcome, but settle for second best outcome. that nonetheless represent any improvements over the old status quo. pgd points to some accomplishments. the party has discarded its predecessors hierarchical ways, the koran example connects better with the people, visit before -- [inaudible] for the first time and moroccan history a number of clerics have declared their assets. the pgd now has the right to appoint over 1000 senior government officials. the monarch can only select 40, though admittedly the most strategic ones, for the pgd that's still a huge improvement. in the economic and social realm, the government has set up a social solidarity fund aimed

at supporting the poor. half of which is contributed by the private sector. it will be primarily aimed at funding medical care for those experiencing financial hardship and promoting education for children from poor families. another fund that the pgd helped create is the family support fund, which was set up for divorced women whose former husband cannot pay their food allowances. so the pgd and the monarchy can also claim credit for a new national health services program, which is benefiting a .5 million poor moroccans, and financed by a tax on private companies aren't. pgd has also begun to reform public sector governance. you know to support the undertaking of micro economic reforms and the establishment of a strong corporate sector. so again the sequence they outserve starts with reform of public governance, improved

accountability at the ministerial level, there at the public level they say would alleviate poverty, would have a positive effect on governance and would stimulate investment. the pgd is aware of the challenges it faces, and it faces many. it's also aware of the resistance to its efforts to promote accountability and transparency. and so far the pgd has i believe it's demonstrate it is sincere acting. trying to promote accountability and transparency. we don't know whether it will succeed. i think it's too early to tell in morocco. we can't judge its experiment based on nine months, too early to tell. so the governments of final battlefield as we move forward will lie in its effort to enact those organic laws i talked about earlier. including the implication of regionalization plan, the judiciary basic law, and the law

that introduces -- official language. the governments ability to implement significant reforms, however, what also to a large degree depends on its cooperation with the palace. the pgd has proposed several reforms, but those reforms, some of them, have collided with interest of senior civil servants, military, prominent businesses that have access to the supreme court as a power. all these reforms will require the strong backing of the palace, and let you want a confrontation. the pgd doesn't want a confrontation and they will also require strong backing by all the parties within the government. as well as of course substantial change in the mentality of the government bureaucracy. so we have seen how the pgd's efforts to tackle corruption,

for example, representatives within its own leadership, and the pgd was accused of being populist. the minister of justice of pgd, hardliner, ran into trouble, for example, when he tried opening investigations against two figures close to the regime, former ministers. and the current treasurer. this move according to one observer clearly upset the relationship between the pgd and the palace. in private conversation, he complains that he doesn't have control over several employees in his ministry, for example, who own their position to influential personality. he doesn't have control over the ambassador, he says. we are not a party in power, it's an illusion. we exercise power with other partners. minister in charge of relation of parliament.

and the youngest minister of communicate she was, grumbles, that there are efforts to undermine the government. whenever it launches a reform initiative. in the judicial sector, he said, it's the judges who are mobilized by hidden forces. in the social realm, the union's, corrupted syndicates. indie media it's the co-opted -- corrupted pressey said. we all remember last march when he saw his media reform torpedoed. the pgd promised its voters that once in government it will exercise oversight over finances in television and greater, but this effort resulted in clashes with officials close to the regime. obviously, neither clarify for us to these hidden forces are. but i think we can guess.

this skirmishes between the pgd, remember the pgd's key is trying to choose its battle, choose them carefully. the skirmishes came to ahead of us couple of months ago in august when a young pgd later, criticized the king for not adhering to the constitution. the palace allegedly reacted to his complaints by banning pgd even in tangier wherethe secretary-general, the head of the government was to deliver a speech. as one more stop it, the head of state and ahead of government from speaking. choosing the local authority of the ministry of interior to do so. the minister of the interior obvious it is supposed to be an ally of islam. nevertheless, i believe the pgd is very equipped i think to resist pressure to because there

are undoubted comparisons between this experiment and the experiment of the 1998, the socialists who came to power. the pgd's leadership is younger. the party measures its youth played an important role. it's more transparent. it's also more ambitious and very calculated. but the biggest challenge with the pgd is the economy i think. how to reconcile the desire to advance morocco's standing in international rankings, rocco's economic competitiveness with its calls for social justice. morocco's economic -- complicated by several factors. as i said the pgd only holds 107 seats out of 395 seats in the lower elected house of parliament. it only has 11 out of 31 ministers, cabinet posts.

the upper house is also indirectly elected, which is indirectly elected by notables still dominated by a regime supported. when the government was formed, the pgd expected economic growth to be 7%. that was revised to 5% and then now to 3.5%. this will have repercussions on the pgd. so just to conclude and then can open up the question, thinking you still in charge. his personal legitimacy remains intact. he still very popular, usually. most moroccans desperately want change but insists on a peaceful transition that hurts the country down, taking the country down the risk of destabilization protests, which would necessary meet with violence state,

repression. i haven't talked about the extra parliamentary opposition. we can discuss that in the discussion. thank you very much. >> terrific. thank you very much. that was really superb. as i was listening to this presentation i anouar and then think about hugh's presentation, certainly in the case of algeria, it's very difficult to see an opposition that can find a way to push the regime in any substantial way, given the kinds of political culture of the hocrisy that you describe it in the case of morocco of course this isn't an extreme sophisticated opposition that finds ways to both engage and acacia have covered patient with the regime. one can see the possibility for some sort of gradual cooperation that might further push the political system down toward some sort of transition. it's a slightly hopeful case but nevertheless i think anouar's presentation illustrate the limits of the change that exists right now in morocco.

we have until 10, so that gives us about 20 minutes for questions. please ask you questions, no speeches please. identify yourself and let us do specifically to whom the question is addressed. yes, sir. [inaudible] >> there's the mic. >> my name is charles. underworld vice president of moroccan jews. i have two questions. one addressed to mr. roberts. in your exposé on algeria you didn't mention at all, you know, you didn't explain the algerian position on the western sahara and the expanding al qaeda in the maghreb -- [inaudible]. i would like you to address that. my second question is for trend

one. weekly -- trend one. you mentioned the position of morocco today in a very, explained the political situation. it seems like morocco of the maghreb has been the only country that has provided stability right now and has been a model for the rest of the arab spring countries. i think democracy in morocco will be coming, forthcoming, but it's better to come through negotiation and political move than a radical change as we've seen in tunisia and libya and egypt. thank you.

[inaudible] >> really knew about the position of westerns horror so i left that out. the algerians of course have been sustaining their position over the years, despite everything that's been done to try to pressure them out of it. i think that the question of al qaeda and the islamic maghreb, considering it is massively activated, this is something a later panel will be dealing with, i didn't want to trespass on a, but the problem as part of the predictable fallout of the destruction of the state in the libya is unquestionably weakening algeria's strategic position. so a question may be over how long it can sustain its defense, its position on the western so hard. that may be at issue now. simply because of the extent to which a jury is beginning to feel in circles, strategically

on the defensive. >> think you. and anouar? >> for now i think so because there is still no appetite in the streets for radical change. the moroccans are still patient, still willing to give time obviously to this experiment. they are cautiously optimistic. as i said it's only nine months. we're only nine months, but things can obviously change. the pgd stu believes that it can affect change in partnership with the monarch. they have been frustrated, obviously. they belief that there is a struggle to delineate the contours of power. they are just sizing each other up, right? the monarchy put limits that the

pgd cannot cross, and he concedes in some other areas. so the pgd believes that first thing they need to do is to operate from within the system, know how the system operates, know who the actors are, right? and then start to change it from within. we have seen the pgd there were elections obviously a couple of weeks ago, and several actors, they believe that the pgd was set to lose popular support. in fact, the pgd crushed the opposition in marrakesh and an active gear, and it showed that it has not lost yet its appeal. the turnout was low but nevertheless the pgd's base is still with it. because the challenge is how to get, is to address august the the concerns of its space and at the same time to address the

concerns of the palace. so for now, incremental change all this is the way to go, the moroccans see what's happening in tunisia and egypt and syria. and for now that's not the path they want to travel. if there is a bag, we say backtrack on reform, the economy suffers further, you know, if this part fails and i don't know what's next. >> good morning. my name is carl and i'm from the u.s. embassy. a couple of my colleagues and i came to town this week for a

counterterror congress to my question is a crosscutting one for all the members of the panel. are there factors internal or external that might motivate the countries of this region to cooperate more together? .. [inaudible conversations] >> yes. what needs to change for this little treatment to be realized is a major change in french

policy. france plays divide and rule in the maghreb, always has done. i don't see it ceasing to do so. [laughter] [inaudible conversations] >> return to that particular question as the day goes on. i don't want to give it short shrift, we're going to come back to it. yes, in the back. >> aaron with the washington institute for near east policy. i had a question on tunisia, i was just wondering what do you think is the future for the party when you see sort of the polarization and he's sort of just out there. and then i have a second question regarding whether you think there's any pressure within tunisia from the opposition about the fact that he's, essentially, wielding power for the group even though he's an unelected leader. so i was wondering -- i have a question about a she da ha knew

chi and whether you think there's any pressure from the opposition regarding the fact that he's, essentially, wielding power even though he's actually not an elected official. so i was wondering if you could talk about that. thank you. >> it's a great question because, um, except for the second one because what you can see is that he acts as a de facto president in a way. he does, um, diplomacy, you know, when people visit from the middle east, they come to him. so he has become some sort of a national figure even if he's not elected, and he probably feels that he has, of course, legitimacy to do so, and, of course, the opposition is, you know, goes strongly against that, um, and against -- [inaudible] so i don't want to give the impression that the political landscape is not vibrant and lively. it is extremely vibrant and

lively. and the new, um, you know, freedoms that have emerged in due tease ya make that political arena extremely interesting. and so nobody is shy enough not to criticize him, and i think he has his share of enemies and critics. and i don't think that's a problem. i think, you know, a lot of, um, tunisian politicians have seen those conflicts and those critiques in a very tense political arena as being undemocratic, but this is what democracy is. so this is not anti-democratic. it is part of the healthy game. and i think the person who understands that is -- [inaudible] so it's very interesting. he has created the -- [inaudible] for the republic. it's a congress, it's not a party. and i think he knows it, and this is why his party is in really like it's unexistent

anymore, i mean, it's finished, right? but i don't think he's in with the creative party, and he himself in a book that has been republished in 2011, it's a book of interviews with a french political scientist explains that very well. he says that, you know, political parties are not what tunisians are looking for. it's not -- it's something that they're not really attracted by. so i think he has, um, he has understood very well that conflicts have to continue for a healthy democracy, and i'm not talking about, you know, violent conflict, conflict in the political sphere. but the flip side of that is that mazuki has a difficult time to play the role of a president. so he hasn't been able to be this mortal guardian of the republic, he has had a very difficult time to be the figure unifying all tunisians. also because he has made the choice to ally with -- [inaudible] because of the polarization of

the political land scape has -- landscape has also weakened him very much. so it is interesting to see that, you know, the power of the presidency is not what it used to be, but maybe that's for the best. but on the other hand, it has weakened mazuki's figure. so the question is what role will he play, you know, after the next election. >> you know, in egypt president morsi exists in the political framework, but -- [inaudible] has their own project, and it's economic, it's political and social. and the relationship between that project and the political project of reform that morsi's trying to head up is an interesting one to think about. and i hear echoes a little bit of this in the tunisian case. yes, sir, on the right. >> for any or all the panelists. there hasn't been any -- >> could you identify yourself,

please? >> oh, sorry. sean abbey nader. there hasn't been discussion about what's going on among the countries. they're all in transition, lots of affinity, particularly familial particularly between algeria and morocco, but there's been many visits from senior government officials from all the countries, private sectors are participating in the peo. what is your sense if not on the government level, on the civil society level or private sector level of activities among the societies in algeria, tunisia and morocco? >> we will, of course, be dealing with economic specifics in the next panel, but in terms of the gentleman's question, anyone who wants to tackle that -- >> among or between? >> that's a good question. i think he means between. or among. which do you mean? [laughter] >> among, between -- >> both. take your pick.

>> there have been increased interactions since whatever, arab uprisings among officials in algeria with their neighbors. have there been more interactions in tunisia which has taken a leadership role in resurrecting the amu? where is that going, is it going anywhere? with regard to morocco, does morocco see it as a broader regional role now than it had two years ago? in terms of the new government, does it see itself in that role? it's a fairly logical question in terms of the vision of that region, does it see itself as a region more than it did two years ago? >> this is a question that probably could receive fuller answer later today. um, but i'd simply say one little aspect, i don't think that, personally i'm not yet convinced that any measurable increase in the velocity of meetings between officials is

particularly significant. but i can say something about public attitudes in algeria to what's been going on around algeria, and i would say this, that there's, first of all -- i'm talking about public opinion, popular opinion, ordinary algerians were very enthusiastic about the tunisian revolution originally, and hopefully they were impressed by it. they were also impressed by what happened in egypt. and they were initially incliented to see what happened -- inclined to see what happened in tunisia through the same lenses until the nato intervention. that had a major impact on algerian popular attitudes. and the development of a government discourse that is a negative critique of the arab spring gained leverage over public opinion from that moment. so that's one aspect of it, and the development subsequently of events has led to a kind of

react session of the feeling of being surrounded and on the defensive and suspicious of neighbors. >> mustafa from tunisia. when i listen to the three narratives on tunisia, algeria and morocco, there is something that strikes me. you know, essentially says that there is a major issue of the transition and where the transition is going, going back to your issue is this polarization between the secularists and the non seq. lahrists in the religious establishment of the new parties and so on. and this issue is kind of, does not appear explicitly in the narratives offal year ya. so my question is to

mr. roberts. what does this -- where does this issue belong in your narrative of where algeria is going and where morocco is going in terms of the opposition between the secular and the religious? and, i mean, he mentioned a little bit about algeria, algeria has gone beyond that, and i don't think it has gone away, the issue of the role of religion and secular and so on is still there in algeria. and there is a statement which is presently, to me, when he says, he talks about the pgd, and he talks about the regime. it's like the pgd is something, and the regime is something else. it's like pgd is the government, and the government is part of the regime in my sense. so what is the story? it's like the pgd is something outside of the regime, and then the monarchy is something else. but what i see is really the secularists and t non non seq.

lahrists. it's like the pgd is the -- [inaudible] of the islamists, few yo like. >> okay. thank you very much. why don't we start with anwr, and then we'll have a few more minutes just to wrap up. >> sure. because the new constitution, as i said, it's still ambiguous. so the prime or the head of government still, you know, he has some powers, but there's still interpretation of what that power means. so in that there are differences between the pgd, pgd is true it's a party in power. it does not control, obviously, the government. it's only one among many. so it does not have a majority. but there have been skirmishes between the two, because right now as i said the challenge is how to interpret the constitution in a more democratic, democratic way. as far as polarization, yes,

there is polarization. there has always been polarization between secularists and islamists. we have seen that within the movement of february 20th, for example, how it broke up. as withdraw from the movement. so the ideological polarization has reemerged again. and, obviously, that's inimical to political progress. we have seen battles between the pgd over the media reforms and the other parties. some of them are based on ideology, and some of them are opportunistic because this is where you attack the pgd. if you see the media reforms, obviously, it's true, you wanted to introduce more air bake, but really -- arabic, but the problem with the media reform is it wanted more oversight over the finances and the programming of tv. so there is polarization, and, you know, and that's contributing to some deadlock, so to speak. >> thank you very much.

did you want to add something very quickly? i'm getting signals from the true supreme leaders here that we have to wrap up soon. >> let's just follow up on the question, i hi it's an interesting question -- i think it's an interesting question. oh, sorry. just to follow up on mr. nabli's question, i think tunisia durant have a king -- doesn't have a king. and so that makes the poe hardization much more visible, and it shapes the political field in different ways. but i would say that the polarization exists, but it might be more hidden in algeria and morocco because of, um, the presence of the king and the military which tunisia is lucky enough to have, but it makes the transition more risky too. >> thank you. just very quickly, the polarization between islamists and anti-islamists, secularists that was very bitter 20 years ago, um, was, of course, a polarization between rival forms of identity politics, neither of which were capable of developing

a plausible program for government which is what suited the regime very, very well. it's became less bitter because in the course of the '90s the islamists stopped believing in their utopian idea of -- [inaudible] and the secularists backed off the idea of reproducing an algeria la republic allah fran says. both sides dropped their utopianism. and they both, basically, subscribed to the compromise constitution established through the revisions in 1996. all the legal islamists accept that constitution. in other words, there's no longer a constitutional project associated with either of these identity positions. therefore, it's becoming gradually depoliticized. the problem is, that's reflected a loss of interest in the whole question of constitutional change which is part of the reason for the impasse. the algerian so-called

opposition is -- [speaking french] it has absolutely no idea about what to do about promoting constitutional change. once it's given up utopia, it can't address reform. but that's the reasoning for the softening, if you like, of polarization. >> okay. i'm afraid we're going to have to wrap this up. i'm very sorry there's other questions, but i'm clearly hearing we have to move to the next panel, and there isn't much time between this one and the next one. so thank you very much for a fantastic introduction to the day. [applause] [inaudible conversations]

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[inaudible conversations] >> i encourage you to, please, take your seats.

could i energetically encourage you to, please, take your seats. the coffee will be there for the rest of the morning. [laughter] thank you. [inaudible conversations] >> it's my pleasure to open the second panel of the day on an issue which i think all the people who follow this closely think is probably the key to success. it's easy to talk about the politics, it's easy to imagine political agreements, but the hard thing is getting the

economy to work. the economy is the underlying knew directs -- nutrients that make it possible to have political compromise. and, of course, the economies in north africa have a series of problems, there are short-term crises, but there are also long-term vulnerabilities that previous governments found enormously difficult to address and that current governments, even more fragile than their predecessors at the current time, often find even more difficult to address. at the same time, we look out at the region, we see untapped potential. we see the region not as the source for global energy supplies, but also new markets, investment in regional trade, and what we have assembled here is what i think is a rather remarkable list of people to help walk us through both where we are and where we might go. speaking first, dr. care line freund the chief economist for

the middle east and africa at the world bank. she previously worked at the international monetary fund and the federal reserve where she focused on economic growth, international trade and international finance in the developing world and transition countries. after her, dr. nabli is the former governor of the central bank of tunisia. where i first met him was when he was chief economist and director of the socioeconomic development group add the world bank's middle east and north africa division and senior adviser to the world bank's chief economist. he also served concurrently as the minister of economic development in tunisia and the minister of planning and regional development as well as chairman at the tunis stock exchange. dr. terrab is director general and chairman of the board of trustees of ocp. i will not inflict my french on anybody. that stands for something, you can imagine what it would be. prior to joining -- [laughter] trust me, it's much better that

way. arabic is easy for me, french is beyond me. prior to joining ocp, he was the lead regulatory specialist in the global information and communications department at the world bank where he also headed the information for development program. he also served as director general of the national telecommunications regulatory thort in morocco and as an adviser in the royal cabinet and as an analyst in transportation systems for beckett tell civil minerals incorporated. what we are trying to understand through this panel and, as i say, i think a quite remarkable array of talent to address it, is what are the tragedies to address the issues -- the strategies to address the issues of unemployment, education and social spending? what's the near term strategy, what's the longer-term strategy? what kinds of approaches can governments take to provide a social safety net? obviously, the transition to adapting the social safety net

to different kinds of structures, different kinds of restraints is very, very important. we look, and we see a weak european economy, and a european economy that's much more integrated with north africa. what does european recovery mean for the things, the political and economic changes we're concerned about in north africa. and then, of course, the questions of the u.s. role and of the role of islamist parties that are rising and what's their attitude toward change. so there are a host of important issues, we have a host of expertise, and i'll ask dr. fliewnd to begin, if you would. thank you. >> um, first, let me start by thanking the organizers for inviting me, and i'm especially honored to join this esteemed panel. um, i also recognize that i'm less of an expert on the region than the other panelists, so

coming from the world bank i'm going to talk in part about the economic challenges in a framework of lessons from other regions which is really the comparative advantage of the world bank. um, so i'm going to discuss three issues in my remarks today. first, some experiences from other democratic transitions. because the arab spring was remarkable, it was unprecedented, but there are also previous episodes that are somewhat similar. so, in fact, we can identify 90 other transitions in the last 50 years that we might be able to learn something from. second, i'm going to talk about some of the critical economic challenges and opportunities that the region faces and focus exactly on one of the things that was mentioned, the long run versus short run challenges. and finally, about the environment facing external actors. so let me start with

transitions. some questions that are often raised are what can we expect before, during and after these kinds of transitions. how long is it going to be before growth fully recovers? will governance improve? can one country learn from another? so to answer this question, what we did was we simply pulled together all the transitions that have taken place over the last 50 years and looked at this data to see are there obvious patterns that emerge. so what we did was we used this database which is the pollty four database, i'm sure some of our political scientists here are familiar with it, which ranks autocracies and democracies from 0 to 10. and what you can do is look at what happens if you have a regime that's an autocracy, and it suddenly jumps to democracy and is able to sustain it.

so we create this kind of filter where we can define successful democracy transitions, successful democratic transitions as a sustained and substantial increase in this index. and we can define failed ones as a situation where it improved, but then goes back or improves only slightly. and then, finally, gradual ones where this index slowly changes over time. and just to give you some statistics, there were 90 transitions in the last 50 years. this is eastern europe, this is latin america, this is africa, this is asia. all over. a few in men that as well. 45% were successful, and that includes lebanon. 30% were failed. it includes algeria in our sample, iran andy booty, and 15% were gradual, so they were the

show type of -- slow type of transition. what happened during these transitions? well, very similar to what we saw happen in due eyes ya -- tunisia, growth plummeted in one year by about five percentage points on average, exactly what we saw in tunisia where we had 3% growth in 2010, and it dropped to -2 last year, but it recovered quickly in most transitions. this is also what we're seeing in tunisia, it's back up to predicted 2% this year, and this is what happens in most transitions, and then a few years out it goes back to normal. and one thing that's especially interesting in these rapid transitions is the long run growth after transition tends to be somewhat higher than the pre-transition growth by about a percentage point. so that regime change did stimulate some sort of economic changes that improved growth

prospects. but of special interest, it didn't matter if the democratic transition was successful or failed. we see that effect in both times. types. in contrast, the gradual transitions, these slow transitions tend to actually have the worst outcome. they have growth dips that are about double what we see in the rapid transitions and are much more protracted, taking five years before growth improves. but it does -- within the gradual there's two kinds of groups. there's the group that's gradual because the democracy doesn't take hold, so there's constant struggle and uncertainty, and there's a group that does it really well in a predictable way. ghana's such a country that had very strong growth during a gradual transition because they did it in a predictable way with a very popular leader in power who was actually the one who

turned it to a democracy and managed to stay in power and get elected in a free and fair election. so it is possible to do the gradual transition well. but the reason the growth is worse on average during gradual transitions is because of uncertainty. and this is what we're seeing now in this region where uncertainty is so high. a recent survey we did of investors, the world bank did jointly with the economic intelligence unit, showed that 60% of investors are on the sidelines or withdrawing investment in developing menna. so uncertainty is the first thing. countries really need a plan to resolve this uncertainty in order to bring investment and growth back. one other thing we saw from this study is that there are spillover effects.

spillover effects in the form of regional spillover effects. whole regions are more likely to see successful transitions if you rook at a map -- if you look at a map of these transitions, you see that regions tend to move together if one country moves first. so this puts some pressure on tunisia really to get it right. it starked the revolution -- it sparked the revolution. if it can get it right, it can have a huge demonstration effect for the rest of the region. so just to sum up on this first point, what i want to emphasize is that in these rapid transitions irrespective of whether they go back to autocracy or succeed, growth tends to resume and just replacing the regime tends to improve that, the outcome. because leaders realize they'll get ousted if they don't improve things perhaps.

but predictability in setting a road map for transition are o important. -- are so importa. this uncertainty during what happens in these gradual transitions that are gradual not by design, but by default, that's a real problem. the second point i want to talk about is some of the main economic challenges and really focusing on the long run/short run trade-off. because if we don't get the short run right, there's a danger that the long run is going to be compromised as a result. so if we think about the structural issues, one thing that sums it up to me is if we look at china. china's been growing at 10% with unemployment below 5%. if we look at countries like algeria, morocco, tunisia, we see precisely the reverse. finish we see growth under 5%,

around 5%, and unemployment well above 10%. why is in the case? why has growth been so slow? and this is, that's overall growth. if you look at per capita growth, the statistics are even worse. well, there's a few reasons. i mean, a bulk of it is this absence of a vibrant private sector, but why hasn't the private sector been able to take off? there's the bloated government sector where we see higher wages and more workers in that sector than in other similar economies. there's the so-called skills mismatch where businesses say they can't find qualified workers, but workers at the same time are saying they can't find good jobs. and that's because the education system has developed in a way where people are getting educated for a certain type of job which is a public sector

job, not for a private sector job. the incentives are in the wrong place. high fuel subsidies that have sort of characterized the region's type of social safety net is also a big problem. it's not just a big problem because it's costly to the fisk, it's also a big problem pause they're re-- because they're regressive. because rich people have bigger houses, more cars, more aprudences, etc. and they tend to go to industry. but by going to industry, there's a double burden there because you're actually subsidizing one input which is fuel while taxing labor, yet your main opportunity is a big labor force. you want the take advantage of the human capital, yet policy is pushing industry to take advantage of fuel instead. there's also the poor business climate which has been

recognized in a firm of reports -- in a number of reports. we have one that came out before the arab spring privileged a competition where the private sector's characterized by a lot of rules and regulations that aren't uniformly enforced, so so it's very difficult for businesses to compete. and new businesses to start. and finally, in some cases there's evidence of overvaluation of the real exchange rate. and this is a big problem in a day and age when a lot of countries around the world are competing not with competitive exchange rates, but actually with undervalued exchange rates. and we see this in the forms of high trade deficits and decreasing as opposed to increasing diversification of the export structure. so why has this been so hard to change? many of the things i've talked about are recognized going back

years and years. um, well, reform is very costly. so there's this kind of j curve of reform where when you try to remove subsidies, the industry you have is going to get hurt, and can it's going to be a few years before the new industry develops. and these people are organized to want to keep those subsidies in place. so reform is very costly in the short run. so the biggest challenge is how can government respond to get the long run growth without hurting the short run? so there are some short run things that can be done in order to make the longer run reforms that are necessary more palatable. and one of these is we need to see more avoidance of backsliding. so the first response, and i think this was mentioned in the previous panel, after the arab spring begun was to increase public sector wages and to raise

subsidies, when these are precisely the things that are preventing you from having long run growth. and more recently, at least in morocco, we've seen an increase in fuel prices which is an encouraging sign. but there are also ways to try for some quick runs and confidence-building measures, and these can include things on the political side like improved access to information. tunisia's made steps in that direction, morocco is as well. improved service delivery, better inclusion such as the national initiative for human development program in no moroc. smes, while these are not going to be a cure for jobs, they can help to build confidence and, of course, there's labor intensive public works simply using fiscal policy to bump up employment. there's also little things countries can do, and just to

give one example here is from a country that transitioned and did make a dent on corruption, something most countries don't do is georgia. georgia had a policy of georgia without corruption. they jumped from 83rd, well worse than all the north african countries on the corruption perceptions index in 2002, to 35th percentile, leapfrogging all the north africans in 2011. they fired the entire police force. accidents actually decreased. [laughter] this is how bad their police force was. they trained a new one, they used external assistance to pay the salaries of the workers. they housed their police in glass police stations, that was taking transparency to a new

level. [laughter] so there are things that can be done. they put billboards everywhere. if you go to georgia, saying numbers you can call if you're asked for a bribe. so there are things that can be done that build immediate trust and confidence. so finally, i know i have to wrap up, the last point i would like to make is on challenges facing external actors. um, there's the usual challenges we face operating under uncertainty with changing counterparts, changing circumstances, um, unclear bent whether it's going to go populist or free market, there's also this long run and short run trade-off i've been talking about that is development specialists, it's tempting for us to go towards the long run. but we also have to think about the short run. but the more unique challenge in this region is distrust because of our own past real and

perceived failures. and gallup poll evidence shows that, for example, in countries like egypt and libya you see a worsening of a demand for assistance from world bank and imf. um, they'd prefer to get assistance from within the region, though in algeria, morocco and tunisia, the polls aren't going in that direction. we're trying to be humble and recognize this. we're also trying to do things differently, focusing more on governance, especially accountability and inclusion that because income inequality did not actually look so bad in this region before, there was a sense that that wasn't the main problem. but clearly there's something about a quality of opportunity that we had missed. and build trust, meeting with a broader range of people, um, part of this is using social

media. we have developed facebook page for the menna region at the world bank, and can we have a very active -- and we have a very active blog. and then finally the last point i'll make is that this is just a really bad time for transition. we have the global economy in the doldrums. so while the world should be focused on the arab spring, instead every time you pick up the paper, it's focused on greece and the eurozone. and so that's just pulling people towards a different topic which is unfortunate, and it also just means there's really limited scope for serious initiatives either through trade and migration or through funds. the money's just not there. that said, of course, there's a great deal of regional wealth, but so far it has failed to materialize in a sizable and predictable way.

so i'm already out of time, so let me conclude there. thank you. [applause] >> thank you very much. dr. nabli. >> first, let me thank the csis for this opportunity to be here. to be invited to be here with you today. we're asked to talk about the challenges and the economic challenges and opportunities, and let me start by saying two things. talking about economic challenges cannot be discussed independently of the political process in political transition. and let me illustrate that by two points. or by illustrating by saying there are two rules or two -- [inaudible] about transition which are really important to keep in mind when we discuss economic strategies.

the first is the, it's related little bit of what caroline was saying, any successful political transition requires a strong economic recovery and vice versa. there is a strong interaction between the political transition and the economic transition. if one works well and the other one works well, you are successful. but if one works bad and the other, and then the other one is not going to -- [inaudible] you are likely to fail. this means one thing that is extremely important up front. if your political transition as we discussed in the first session is not going so smoothly and then it's lots of uncertainty and lots of problems, then your economic transition is going to be suffering as well. and you are unlikely to have a good strategy and or a clear strategy for economic transition. and, actually, built in the program of this discussion today

that it's like one can deal with economic challenges -- [inaudible] of what's happening in the political arena which is not possible. that doesn't happen, that doesn't work that way. and my talk will illustrate this in some, in some more detail in a few minutes. the second, the second -- [inaudible] rule of transition is that i would like to highlight is what i like to call the high and low of transitions. the high and low of transition will say something like this, things would get worse, much worse before they get any better. and this is something that is happening across the board. almost everything except one thing. whether you talk about security -- >> we are breaking away from this csis event on north africa at this point for live coverage of the u.s. senate. lawmakers coming in for a brief pro forma session today with no legislative work scheduled. we will be right back to this

symposium on north africa in just a moment. and now to the senate floor live here on c-span2. the presiding officer: the senate will come to order. the clerk will read a communication to the senate. the clerk: washington, d.c., october 12, 2012. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable joseph lieberman, a senator from the state of connecticut, to perform the duties of the chair.

signed: daniel k. inouye, president pro tempore. the presiding officer: under the previous order, the senate stands adjourned until 10:00 a.m. on tuesday, 10:00 a.m. on tuesday, >> wrapping up today's pro forma session in the senate. legislative work will resume on tuesday, november 13th, at 2 p.m. eastern. we'll have live coverage, of course, here on c-span2. and now back live to csis and the forum on knot africa. -- north africa. >> the first top challenge, there are many others, but two main that i would like to emphasize in this transition and in building a strategy for recovery and for eventually higher growth. one is the macroeconomics, and the second is the role of private sector. because it's critical for employment and growth. now, to illustrate it with what i mean, i would like to discuss when i discuss the macroeconomic challenges, say a few words about what the situation was

before the revolution, what happens during transition and what's likely to happen, you know, in the medium term and the hong term. long term. so when we look at the macroeconomics, on the macroeconomics, we see that -- and i'm talking about tunisia to a large extent, but i think what i say applies broadly speaking to the egypt and even to libya in many ways and morocco and so on with different nuances, but broadly the same. we know that the north african countries' macro economics was not pretty -- was not bad before the revolutions. countries had economic stability, relatively low inflation typically, you know, reasonable fiscal policies, no major fiscal imbalances, debt was brought back to control after some digressions, no

financial crisis. so things on the macro side were, you know, real exchange rates were, you know, maybe a little bit here and there, but no major, something that you can really talk about as major. so we have the initial conditions, if you like, of the revolution were fine. i mean, no major -- you are not facing major challenge. so what happens to the -- [inaudible] on the macroeconomic side? essentially, it has become difficult to maintain macroeconomic balances, and pressures were for imbalances to build during the transition for many reasons. the first one is on fiscal side. clearly, there was very much pressure to increase expenditures to meet what the so-called social needs which were the origin of the revolution whether it was employment or whether it was

regional, regional imbalances and so on. there was a lot of pressure to offer expenditures including through employment, including through increasing wages, subsidies and all kinds of things. so public expenditures, you know, shut up whether it's in egypt or tunisia, you had a huge increase in public expenditures, fiscal deficits increased, debt started to increase and so on. and eventually this had an impact on inflation, inflation started to go up, current account testify -- deficits start to increase in 2011 and expect in 2012, pressures on exchange rates. so you have serious deterioration in the macro situation. and the problem is that many -- and i'll come back to this --many of these pressures are not reversible. they're built-in pressures that are likely to continue in the medium term.

which means going back to the medium term and the prospect in the medium and long term a lot of macro uncertainty is built into the system. a lot of macro uncertainty, fiscal balances are really in, at high risk of -- because many of the public expenditures are recurrent, are not going to be reversed whether it is wages or employment, higher wages, higher employment, public employment including subsidies. so public debt is likely to continue to increase. many sources of new source of -- [inaudible] and liabilities are building up in the social security areas, in the banking sectors and so on. therefore, thises in medium term -- there's in the medium term significant risk and so on.

these risks also putting pressures on competitiveness if the exchange rates don't adjust quickly enough and so on. so what you have is in this macro, this macro frameworks are really under pressure, and they are likely to remain so in the medium, in the medium term. and this is going to be a big challenge for building, facing the new challenges and building an investment climate which is conducive to higher growth and so on. so this is some problem that we should keep in mind. the second major challenge, i think, is related to the private sector. i think caroline was talking a little bit earlier about why the private sector was not strong and growth was not high enough before the, before the revolution and so on. i think there has been a lot of discussion of this and lot of

debate. my own view is that i have come to this conclusion that before the revolution one of the basic weaknesses of the private sector -- despite the reforms that were undertaken in the '80s and '90s -- the private sector did not meet the challenge, did not grow as what had been expected. and the basic reason for me was the credibility of the political systems. i think corruption was going up, the private sector was never, you know, the credibility of property rights was always a question mark and, therefore, the private sector was never really sure that it can grow in size. and this has meant that this credibility issue and property rights issue was a central one that explains. it's much more than business climate and much more than, you

know, labor market policies and so on. now, what happens within the transition? in principle, in principle the revolution was supposed to resolve that problem. because if you are going towards a democratic government, you are supposed to going to a system where there is rule of law, where you have credibility, protection of property rights, therefore, better governance and, therefore, the political system should be con deuce i have to -- conducive to higher investment and eye growth. but the problem is that in the interim the iron law of transition applies. actually, credibility, you know, gets worse. because you still do not have a new political system in place, you don't know who is going to be designing economic policies. of you don't know whether the new political regime is really going to be protecting property rights as expected or not, and, therefore, what you have in the

interim period is a decline in private investment, a decline in the activity of the private sector and the wait and see, i think, the 60% that care line was -- caroline was mentioning is symptomatic of that. so in a transition things get worse and, therefore, the private sector is not going to -- [inaudible] in addition to that, and there are some specifics, there is this perception that develops that the private sector is corrupt anyway. it was linked to the previous regimes, it was, it was rich because of corruption and, therefore, it has to be brought to account, and this brings all this issue of transitional, so-called transitional justice and what do you do with that. all of this, you know, means that the private sector is not going to be playing that role during the transition, and you are going to be facing major challenge. that's what expands the collapsing growth, that's what collapse of employment, increase

of employment and so on which is exactly the opposite of where we want to go. of it's going the other way. so this is a major challenge. so in terms of prospects, the big, big challenge is to reverse that trajectory. and that is why it's so important, it's so important that the political transition gets, you know, moving in a predictable way with, you know, good road map and predictability in terms of what's happening and of the rules that eventually will be prevailing in the economic area and so on. so that brings me to the first rule i was talking about. so the successful transition is con tin gent on political -- contingent on -- economic recovery is contingent on successful revolution and, therefore so this political and

economic transition can go hand in hand and resolve the issues. now, economic strategies and challenges, clearly there are lots of them, other issues besides of of this macro and private sector. we can talk about business environment. there are tons of them, and the world bank has, you know, potential to work on tons of things. but we have to keep in perspective the importance of things. i don't think, you know, playing around with business environment rules here and business is really the most important thing on this stage. it's really focus on the major things which as i said are really the macro and the credibility of the political transition is really the most important thing. now, i don't know -- how long do i have? conclude? two seconds? yeah.

what i want to -- what i was planning to say is that where do we stand in terms of the positions of the political parties and the political players in terms of this economic challenge and so on. i would say two or three very quick things. first, political parties don't have views on macroeconomics. political parties tonight have clear -- don't have clear views on medium-term strategies. there is no political party which says i would like to have, you know, a bad macro, or i want to have, you know, increasing expenditures, i don't care what happens to the exchange rate or what happens to inflation. everybody would like to have more expenditures but stable exchange rate, no debt. they always -- but their views are inconsistent typically.

it's not that they have a strategy to make things bad, but they like the good things, but they don't like to have to see that there is -- [inaudible] they have to worry about -- [inaudible] so political parties don't know constraints. that's the problem with political parties. which means that when they get into trouble as i was saying in terms of risks on the macroeconomic, it's not because they want to run the risks because they are, you know, dealing with a short-term issue and they are trying to postpone the consent for the future, and that's what, and that's what gets you into trouble typically. so there is no debate on those issues in any explicit way. so on the other hand, if we want really to deal with the macro issues and the economic challenge, you have got to deal with the subsidy issues. subsidies are becoming the major issues. you have to deal with the public sector employment issue.

you have to deal with the wages. you have to deal with some of the contingent -- major issues building up in algeria, i mean, in due tunisia and egypt on socl security, major issues. in tunisia, major issue on the banking sector and the portfolios of the capitalization needs can so on. so this is a major issue, and so on. in terms of the other areas in terms of the private sector and growth, all of the parties, almost all of them would tell you the private sector really critical except some of the -- there are some leftist parties who say, okay, we like private sector, but private sector is bad anyway, so we try to deal with the private sector. but how to do it and what is required to do is really remains how do you achieve really an

improvement in the credibility of government in preserving property rights so that governance and political parties do not act as they did before, as, you know, grabbing hand if you like, grabbing hand of the private sector. but what we are seeing, we are seeing a continuation of the same now. during the transition, actually, we are seeing some of the party behaving with the private sector as the old regime used to behave with the private sector. which means that the improvement in credibility of the private sector is not really happening. so this is likely to undermine any recovery of growth, any recovery of investment and any, you know, dealing with the employment challenge. so, um, to sum up, my bottom line is that it is tough, the transition is difficult, it's likely to continue to be difficult.

and there is no way to meet the economic challenge of employment, growth and so on if the political transition does not go successfully and quickly. and does not drag on. because if it drag cans on, i think it's really -- if it drags on, i think it's really a recipe for a major failure and, therefore, both the political transition and the economic transition would be in jeopardy. i will stop here, thank you. [applause] >> thank you, dr. nabli. dr. terrab. >> good morning, everybody. also thankful for csis for arranging and organizing this conference on a topic that i feel is more important than it gets attention in some circles, namely maghreb.

i have a big challenge. they put me on a panel with two prominent economists, and i'm not going to be foolish enough to try to give you any insights on current account deficit orifice call deficit, although i agree with something, many things you said in particular that the exchange rate is, has been overvalued, although very easy to see from an exporting company. but, indeed, there are some, some of these challenges there. look, what i want to do is share with you an experience from a are different perspective which is that of a state-owned enterprise. very anecdotal ideas. but i hope that -- and i'm sure they'll reinforce some of the things that were said before. but first, i think that we are definitely embarking on a new era from an economic point of

view in countries in the maghreb. i also have to say that minorities really more on morocco, do i think countries like tunisia share the same challenges, so take what i'm going to say as the statements on morocco. but what i think in terms of these transitions, and we talked about political transition before, in terms of the economic transition i think as much as the political transition there's a unique characteristic we should keep in mind is they're going to be forced transition as opposed to chosen transition. i think it's very important to realize that a lot of the things we're discussing today in terms of reforms -- and you eloquently outlined -- were discussions we had with economic partners and the international finance institutions and the development

agencies in the early '90s. we talked about the importance of private sector development and, mustafa, you were very instrumental at that time. we talked about the importance of some reforms including the subsidy scheme, you know? in the '90s many missions from the world bank and imf came to morocco with big problems on private sector development, etc. well, i think we chose at that stage, these countries, not to implement these reforms, let's be honest. at least not to fully implement them. but i think what is different today is those reforms are going to be forced on these countries. and i think there are two really key areas here in terms of reform. one is competitiveness, export

competitiveness. again, after a structural adjustment in the '80s, many of these countries -- morocco and, indeed, tunisia -- passed free trade agreements first with europe in the case of no morocc, also with the u.s. but competitiveness was supposed to be a key ingredient to foster precisely to shorten the negative part of the j curve that you mentioned and go quickly to growth. it didn't happen to a large extent. and the other key area which also was discussed, we had a lot of programs on educationing, etc., is more inclusive growth. i think this is also what explains -- and if we have to be honest with ourselves, this is all over the literature on development in this region, that explains the paradox. tunisia and no morocco were to a

certain extent -- of course, algeria as important as it is was in a different framework -- considered these paradoxes. they went through all the structural, the basic reforms that needed to be done, and yet growth remained on the average between 4 and 5%, not the 6, 7% that would create any social benefit as was expected. so this is why the paradox was there. fairly decent growth, not enough to resolve the social problems, but unemployment becoming more and more of a problem. and i have to say, also, let's be honest, unemployment amongst graduates, amongst people who were educated in a very expensive education system. what i'm going to try to do is, first, agree that political transition has to be fast to really get down to the, to allow

and enable the reforms that need to be done, and they go hand in hand. but i'm afraid that, one, i wish i could be as optimistic as you are. i think we are in long, protracted transitions in our countries. but i think that there are no macro solutions either in terms of economy. i agree that the fundamentals have to be there. but, look, we have a paradox. we're talking about -- i read yesterday some, some report from a rating agency saying, look, there's a problem, we may downgrade one of the countries because potential, you know, unrest looking forward, at the same time recommending that the subsidies system should also be, you know, done with very quickly. well, you know, i wish we could do both at the same time.

i don't think it is the case. let me go down to what we experienced at ocp because i think it has some relevance with all modesty. it does have some relevance because we are an export-oriented company, we employ 20,000 people, and we represent about a third of morocco's exports. and we lived what i would consider a microcosm of what happened on the arab spring because we deal with three mining cities where the only jobs that exist are ocp jobs, and we, you know, some of the toughest unrest not unlike what happened in -- [inaudible] some of the toughest unrest was in the mining cities. and these youth demanded jobs, demanded jobs with ocp, okay? our response was, first, to analyze the situation. why did these people need jobs

at the same time as our growth path was very, very good? ocp's investing tremendously in terms of growth, we're creating jobs. our subcontractors are creating jobs in these areas, yet the youth from these areas are not the ones employed in these jobs worse. we import labor in morocco. in industrial and construction, and this is not unlike other countries. also in menna or at least in north africa, in the menna, indeed, we import labor. so, obviously, what you mentioned, caroline and mustafa, the mismatch between what the produced and what our needs are. well, we said, you know, we can knock on door and say let's, please, speed up the reform process of the education system. what we did is took, you know, questions in our own hands. we created the program called

ocp skills where not our job, but we're currently training 15,000 from the regions. we opened up at least 95,000 youth registered for the program, and from the outset we told them these are not job withs within ocp. we're going to train you and enhance your ploy about for -- employability with our own subcontractors and with some of our partners, okay? we know very well throughout development program what type of skills are going to be needed, and we're looking five years, ten years ahead. and we train them according to those skills. we also talk very nicely to our subcontractors and invite them to look closely at these opportunities in terms of jobs. the point here what i am trying to make, the point i'm trying to make is part of the answer is not going to come from government or the administration or the private sector, but also from state-owned enterprise.

and the large private sector companies, let's face it, that depend on government procurement for many of their activities. so i think -- i know that the present government, which is part of the regime, by the way -- [laughter] but the present government is looking very closely at what we're doing and trying to, you know, to entice private and state-owned companies to try to tailor some of what they can do to these kind of experience. so, look, what i'm saying is that there are solutions also on the ground. innovation happens on the ground, it doesn't happen from, you know, from washington or from paris. in fact, the other ingredient we need is not only partners that listen to us and try to tailor

their program to the experience on the ground, but i think -- i'll finish with this -- i think there are two key perception issues, problems that we have to deal with. the first one, and i think we saw some of this today, is we view too much north africa, and, indeed, the whole of africa, sub-saharan africa, as an area problem. well, look, this is a big area of stability, comparatively. it is an area that has grown 4 or 5% even during the worst times of the crisis, 2008, '9 and '10. this is an area where youth are, you know, is available and wants to be trained. these are areas of opportunities not areas of problems. too many public policies from the north and, consequently, too many business strategies consider this not as an area of

opportunity. food security is a case in point. i'm talking to it because we're in that -- we produce fertilizers. you know, if we consider that between now and 2050 we'll get at least two billion more people on this earth and that the only really available land to speak of is in africa, and if you look at the international agenda, africa -- and you put two columns, problems/solutions -- africa is consistently put in the problem column whereas it is, it's going to be a big part of the solution. so we have a perception problem. the euro met, the partnership with europe, have to say maybe can be less politically correct than others has viewed north africa as a problem to be contained, not as an opportunity for increased competitiveness of european companies. that was completely missed. well, to a certain extent, okay? the second problem, and i would

say the perception problem -- and here i'm even going to be less politically correct than i probably should -- is what i call the menna syndrome, is viewing exclusively maghreb as part of the middle east or as the southern part of europe and missing its main nature, its main identity which is africa. we're part of africa. you know, the world bank has a menna department, has an african department can. doesn't consider that north africa is part of africa. many diplomacies have north african partners, you know, policies that are part of a broader middle east policy. so i beg, you know, i beg you to consider that north africa is also part of africa. i'll stop there. thank you. [applause] >> thank you very much. so there you have it, the

economic issues seen from the broad comparative perspective down to the regional perspective down to the firm perspective. thank you very much to our panelists for helping lead us down that progression. we have about 15 minutes for questions. i would ask if you could, please, identify yourself. if you could only ask one question, and then my pet peeve, if you could answer your question in the form of a question which is to ask a genuine question of our distinguish canned panelist -- distinguished panelist, not to make a statement and say what do you think of my statement. ..

you by giving us some very concrete examples from your experience but i would like the panel to tell us what sorts of things can actually contribute to this competitiveness, and how does the outside world if you will, the rest of us help you with that? and is it through direct investment and open it more to that? one of the changes that together we can make in the near term, to help surmount this transition period and take advantage of these opportunities? which most of us think are very real. >> thank you very much. who would like to start? >> caroline, did you want -- >> i think i'll actually agree

with mustafa on the importance of large firms. so in other words, another work we've done, which parker in a trade literature that is a tremendous skewness of exports we see around the world. so around the world the top single firm in those countries accounts for 50% of exports. the top 1%, more than 50% of exports. so really the large firms that are going to create the exports, the growth and the jobs. so there needs to be an environment that fosters firms to be able to grow into these large firms, and to export. and to meet a big part of that, especially for small countries that are not going to a negative effects and the rest of the world, and we see a world in which countries are competing with is the exchange rates, a huge tool that can be used. so look at switzerland, under 6% unemployment in the zero crisis,

undervalued exchange rate. look at germany, record employment, undervalued exchange rate. look at china. the exchange rate is such an immediate tool to create jobs. and growth. especially after crisis, that so indonesia got out of its crisis. that's how argentina got out of its crisis. i mean, there was a balance of payment issue obviously by the exchange rate is unimportant to prevent has a mentioned in my discussion there's also political and confidence building measure and labor-intensive public works, et cetera. thank you. >> i think this is the question that we face everyday, what can be done in the near term to create jobs and to relieve some of the pressures you have in morocco.

and the options, immediate options, easy options are not really so much available. and as i was saying, because the engine of growth of creating jobs for private sector is really, as -- it's not investing. it's not there to create jobs. it's not ready to take risks. so you can talk about all of the things you won't have to do, but they are waiting. the big firms, international firms are waiting. they are not ready to move. so the big things that you can do, and that's what i wanted to do is really make sure that you get back to some reasonably predictable and stable environment, politically, socially, and macro economically. that's really the point i was trying to make. now, i would add something else,

since i'm speaking in washington. the other thing that can be done is fixed europe, help fix europe. help fix your. and the u.s. should be doing something. and we are not saying they europe -- u.s. is hoping your. by not fixing your hampering. because europe, because we've been losing jobs, because of the crisis in europe. actually we haven't lost lots of jobs for the last six month. the beginning of 2012. i think after 2011, things were okay. starting 2012, you know, probably i don't know, caroline, really things start to become bad. then we start can ask me how do you create them how can i preserve what i have? and europe is really destroying jobs.

so try to help europe. i think that will help us. and this will help the democratic transition. and by helping the democratic transition as well and stabilizing the political and private and so, these can create jobs. after that there are lots of the things that can be done in terms of fixing all kinds of incentives and things. i mean, you name it. reforms, there are thousands of things that we contributed. you hav have to import unimportt things. >> you agree the importance on large firms? >> i'm not sure i agree fully, because when you look at the exports, the exports is only part of the store because you domestic market as well. so domestic markets has also been means on small firms, which is important. so what caroline in terms of

exports, competitiveness and so far, the large firms are really, you know, but she knows also that a lot of dynamism comes from smes that eventually create innovative freedom and growth eventually. so yes, when you take a call section it looks like this, but for domestic markets a lot of the business is in the sme sector. >> i agree with europe i don't think it will be fixed very soon, unfortunately. i think there's something emerging that we are overlooking which is the global south. you know, we just run a conference on the global atlantic, trying to look at the opportunities that are now emerging in the southern, in southern atlantic with countries

like, you know, brazil and the horn of africa. we've seen the moroccan businesses, of course wishing that europe will be fixed, but also looking very strongly at africa as an area of growth and opportunity. i think that by the way, mustapha, part of the fixing your come is europe looking at africa in, themselves looking at africa in a different prism. that nevertheless, in terms of the as soon be issue, of course -- s. in the issue, of course is not the silver bullet but consider company like ocp, i'm sure this is the case, you know, employees, uses subcontractors and partners but 500 industrial companies.

so indeed our competitiveness depends on their competitiveness, but there's a lot we can do to help them become more competitive and become also export oriented. >> a question here at the front table and one at the back table. >> thank you. do morocco and tunisia have private sectors that are alert, energetic, and imaginative risktakers wax or more tranquil risk averse, only wanting to engage in familiar and comfortable activities? and from a comparative perspective, do we know anything about how to get more of the former and less of the latter?

>> yes, i think, a couple of years ago i think i was at brookings, wrote a book on the arab -- not becomes, i don't know title exactly. the main thesis of the book is there are no entrepreneurs in the middle east, you know, they are not creative and so on and so on. how do you fix that problem. and i think this is misleading operation of the situation. entrepreneurship in the middle east and north africa, mullaney and and traders and entrepreneurs is really base, in the genes of the moroccans and

two nations, as is the rest of the middle east, where the egypt or syria. so it has to do with the environment. and the environment, when you look at this, i think when the conditions are right, then the environment is supportive, it's incredible how much enterprising businesses will appear, and we know, some of them have been able, even if very difficult environment, become very, highest a very older, very innovative and experiment the. there's a number of multinationals now. even in extremely difficult position, private sector, and moroccan, tunisian, egyptian and what have you. so i think that our but also there are lazy ones. there are lazy ones have been living off the connections they

have answered the corruption and relationships and so on. so you have both. that was my point. might point is how is it that you can create an environment where the private sector feels sufficiently safe in terms of what it can do it in terms of what it cannot do, in terms of what it can own and cannot own a that can thrive and enterprise. and this has not been there because, i mean, the previous regime was essentially trying to capture most of what the private sector could give. i mean, they were just trying to control all of the private sector. you had the business and they ask you to share. so the businesses was really geared towards the cronies. so you have cronyism very, very,

very -- and not forget, this is part of the revolution actually. don't forget, one of the recent of the revolution in tunisia at least, try to explain, i don't like to talk about it now because it's -- when the youth, you know, revolted, clearly about jobs, but also about corruption, and about corruption that was endemic in the private sector, not the corruption and the private sector. of the private sector because the headline news were becoming what the son-in-law or brother-in-law or the sister-in-law was, has captured in terms of firm and business and so one. and this made people revolt. it's part of the story. we forget about it. so, so that is fat private sector, if you like witches, but

there's another one which has a lot of potential. >> let me see if we can just slip in one more question. this gentleman had his hand up from the very beginning. >> joshua from state department. from what i've been hearing we've been hearing about the revolutions and the political revolutions and the change in the private sector, but since 2005 with the arab development report and a series of reports going on beyond that, we've been aware of something called the arab paradox of where they close the gap, the education gap and gender. yet if you look at economically, large percentage of the female population in the maghreb but also across the arab world is larger excluded from the economies, not come at in a productive members of the economy. do you think that there's any prospect for an economic revolution or a second revolution to bring that passed the population into the economy and to contribute to the prosperity and stability in

these economies? thank you. >> so we're almost out of time. if we can do that quickly, something about women. >> well, it's very true. so the region has the lowest rate of labor force participation among women compared with all other regions. and then despite the small rate of participation, there's the highest rate of unemployment of the women in the labor force. so it's a very small fraction a cross countries that are employed. and so this is a tremendous resource that's not being utilized. there's studies that is the work to be utilized, how much higher growth and income would be.

unfortunately i would say that at least in the short run, i'm not very optimistic about a change in this, both for what's happening in general on the gender front because a shift in government, but then also even if, if growth were to do better, it's not always the case that women come in. we've seen in turkey actually a worsening situation of women in the labor force as turkey has always put at the example so it is on economic growth. it's integration, but if you look at women's participation, it's really not. this is a tremendously important issue and one that we at the world bank focus on a lot, but i think it really has to be homegrown and born in the region to change things, both through legislation and court cases.

that's a changes come about sometimes in the u.s. through more opportunities in childcare and just a general change in mentality. >> i think, on a survey so my experience, at least that's an optimistic answer because i'm pretty optimistic about the capacities of women in the region based on the women i know, it also after we get through this with a trajectory will go. i want to thank our panelists for a very thought-provoking discussion got and we will move right to the next panel. thank you. [applause]

>> [inaudible conversations] >> [inaudible conversations]

>> [inaudible conversations] >> [inaudible conversations] >> [inaudible conversations]

>> [inaudible conversations] >> cannot ask everyone to take their seats, please. we would like to start the next panel. if everyone would take their seats, i promise will be plenty of time to talk amongst your friends afterwards. [inaudible conversations]

>> can ask everyone to take their seats, please? we're going to start the next panel. thank you. thank you. i'd like to welcome you to a

third panel of the day. we started out -- minus haim malka, i'm a senior fellow and deputy director of the senior program here at csis. we had a great morning with a lot of substantive we started out talking about the political trends, the internal political dynamics in each of the countries in the maghreb. they went on to talk about the economic and social economic challenges that many other countries in the region face. now we will bring those trends together and look at how the political and socioeconomic trends in the region intersect and affect stability moving forward in the region, and the transitions and those countries that are intent station and in those countries that have navigated the arab uprisings over the last year and a half, relatively smoothly. to make sense of these complicated trends we really have the a team of north africa analyst with us today. a group that we been trying to bring together for a long time, and i'm happy that they've joined us today. first is doctor yahia zoubir is professor of international

relations and international management and director of research into politics management at the marseille school of management. he is recently published an article called tipping the balance towards -- in light of the arab spring so he will focus not only on algeria and tunisia but on the radio application of what we have seen transpire over the last year and a half. after dr. zoubir will be geoff porter is the founder of north africa risk consulting and a long-term friend, glad you could make it. and then finally batting cleanup is dr. bill lawrence, the director of the north africa project of the international crisis group. so we are delighted that you're all here for this excellent panel and double turned the floor over to dr. zoubir. thank you. >> good morning. thank you for the kind invitation from jon and haim. haim was very tough with me. he gave me a huge list of

questions to address before coming here, particularly on al-jazeera. so i will divide my presentation into too. one was prepared, the other one will be sort of, i will try to wing it because of the questions that came from the audience earlier today, particularly from the young diplomat from communist diplomat who asked about what's going on with the region in general, and also a little bit about what's going on in the periphery of the maghreb because from my perspective, cannot now distinguish the two regions. in terms of security issues. but the first one i'd like to address, about al-jazeera. i would not repeat -- algeria. but some points might be similar. it was very interesting that in

january 2011, if you watched the needy come and remember my friend contacted me or contact most people work on the region and said, so what is going to happen in algeria? what is going to happen in a jury? algeria is next. so the question that we raise was white is it that algeria was not next, and we tried to give an explanation. and because of the limitation of time i will give only a few points. by the way, algerians take pride all the time about everything, you know, the arab spring started with us in 1988, and you know, even self-immolation, it was not -- it was in algeria in 2010. so they repeated this. and there were 10,000 riots in 2010 alone.

these riots were identified by -- in algeria. so why did this happen? what was the case? well, one of them is, by the way, and i think was mentioned this morning by my friend, algeria is not -- you can think whatever you want about lj but it is not a police state. i remember algerians going to tunisia. it's free, it's a democracy compared to what was going on in tunisia, even people felt free. if you look at the cartoons that you have been in newspapers, immediate so one and so forth. so there was not that stress that you could see, you know, in tunisia, for instance, or even in egypt. but at the same time the promised liberalization, i'll tell you why, we talk about 88 and bring it back, because one of the things, you know, that is

being repeated is the fact that how the authorities reacted to the arab spring. in many ways the reaction ahead in the 1980s, after 1988, is being repeated. you know, history never repeats itself, but at the same time there are some similarities that you can draw. so that's one of them. the regime after the 1988, i don't have to repeat the whole sql of events, but there was a real, real hope of democratization, liberalization as democratization between a king 89-1991. but they came to a standstill. you know the store. and even after the end of the civil strife of the 1990s, the hope of, with the view of the

new president after 1999, you know, they were dashed in the sense that we fell into the same procedures as others, electoral authoritarians or a hybrid type of system. you know, it's not a democracy but it's not real dictatorship, or what have you. so this was one of the things that, you know, the appointment which explains why the algerians say if i make a revolution, if i do it, what is going to happen? another civil war or what is going to happen, what is he going to bring about? the second one is that one of the most important things, and i think hugh roberts this morning was right i think, is that there is no coordination between, you know, of the social economic and political grievances.

for there is no opposition that is capable of channeling the socioeconomic grievances and turning them into political demands. if you recall and 2011 you had more or less to movement. one that was make social economic demands and then a smaller one, and it was nicknamed -- you know, went ahead of the rcp was making demonstrations and had some political demands, you know, he was ridiculed just because there's no anchorage. opposition, i think algiers is one of the few countries and work with the opposition never expires to come to power. i'm very serious. you have a political party, they criticize but they don't aspire to come to power. th only one that was capable of coming to power was the fif. the regime was extremely astute and not allow that. and so this is why you have this

fragmentation of the political, the multiplication of the political parties. from 1989-90 into 1999 there was only one party that was allowed. .. >> because this is what they have built. you know, the whole thing is this historic legitimacy, you know, the regime is ending in that sense because of age. but legitimacy. and participation. if you want to see the algerian

resistance, the population's resistance is the lack of participation. people don't participate in the votes. and so by multiplying, there was hope that, perhaps, you know, there would be more, but at the same time it's also to weaken the national assembly, you know? which the algerians see as just a rubber stamping institution in algeria. one cannot discount the fact in algeria, you know, the history of it, about violence. 1954, 1962, brutal war of liberation. everybody was affected. after the october riots, the 1990s, also brutal. so there is an indelible mark on the psyche of large segments of society. so this explains some of why there is no revolt in any large scale. the other one is what happened at the borders of algeria.

it was said, i repeated, you know, nobody -- i mean, i'm not sure the people realized the extent to which the image, the negative image of nato is among the large, the population at large. nato is identified with algerian war, you know? nato sported france during the -- supported france during the algerian war, and to see nato bomb next door brothers and sisters in thelibya, that played a role in syria and so op -- so on and so forth. algerians are very patriotic, and they might hate the regime, but when it comes to the country itself and its history, that's a different story. i talked already about the weak and the divided opposition. there's the financial resources algeria, you know, if you read the press today, basically, algeria gave the imf a billion dollars as the orange of special drawing -- origin of special drawing rights. so algeria has probably, i hi

the latest figure is about $200 billion u.s. so it's doing quite well. it can buy up anybody, you know? you demonstrate, and you have, you know, a raise in your wages and so on. and it's creating. and by the way, not everything is negative. there are, there have been huge investments inial algeria. in the infrastructure, there's a revamping of the infrastructure and so forth. another reason that i identified is the efficiency of the security services now. the police and all that. you know, they're not stupid to shoot at people or doing anything crazy. so they know how to manage, how to control. and so they would not do what they did, you know, in '88, for instance. another one is africa, believe it on the, is not unpopular among the losses. is not the ben ali, and he doesn't have any negative image.

people still like him, belief it or not -- believe it or not. people see him as the one who has restored, you know, social -- civil peace and so on and so forth. so this is all good. now, how did they, did the regime react to the, to the uprisings in the neighborhood? they were quite comfortable, felt that he was not under any pressure, he will take his time to introduce reforms and, basically, whatever reforms were initiated were already on paper before. so the problem in algeria is not, you know, the laws or, you know, the reforms, but it's the execution. so there. so it's there. now, i think -- i don't know, you tell me because i'm -- five minutes. so today you asked me question or i might not have talked about

the maghreb. after all, i'll do it in the q&a, today you asked me why -- you asked me about the role of -- [inaudible] please, can you tell us whether what's going on in egypt, tunisia and so on might effect algeria. the call faiths still exist in algeria. they are in the mosques, they are very present in a lot of the mosques in the country, in the big cities mainly. these are what i call the salafis. but they are involved in business. they are involved in a lot of business, especially in electronics and so on. if you go to some neighborhoods, all the mobile phones are controlled by salafis. so they are there. we don't foe how powerful they are. -- we don't know how powerful they are. but, again, so far they have not shown any interest in stirring

trouble. so that's one of the questions you asked me. you asked me, also, about the succession. i think if you want to try to -- i mean, anybody who says or claims that he might know who may come to power in algeria is, you know, i mean, has a special crystal ball that, unfortunately, i don't have. but if you want to see, i think it is possible to look at what's going on. you have to observe the developments within the fln. and, again, now the problem is within the fln and the rnd, both leaders, they both are facing troubles within their own, within their respective parties. so there are things that work in their favor and things that don't. i think if you look at the fln, probably been fleeced. no matter how little charisma he might have, but again, he could

be interesting to look. now, since i promised in the audience, i wrote a piece in all modesty on the, on the -- i wanted to look at how the region, the maghreb itself might react to what's going on. and, again, i like history, and history is very interesting and very revealing. look at how the arab maghreb union came about. the arab maghreb union came about at the time of difficulty for all the regimes in the region, be it libya, algeria, tunisia or morocco. they were faced with islamists, or they were faced with europe, so on and so forth. same thing happens now. if you have observed, they -- and, again, of course, there's always these alliances that are made, and then they're dissolved and so on and so forth. but what happened? initially, the libyan situation created the big headache for them. you know, there's article 15 of

the treaty of the uma where one is attacked, the other ones could would come to his rescue, and so on and so forth. so what i can assure you, i know in the media there were rumors thattal -- that algeria supported gadhafi. i can assure you there is absolutely zero evidence of that. if fig, i am, i am sure that the algerians were quite happy to see gadhafi go because he had caused them more headaches than anything else, okay? but there were real fears which today prove the algerians right. i won't cite one of the u.s. high diplomats who told me in confidence the algerians were right about the situation in libya. so the situation in libya created the problem for all the maghreb countries. because of time, for tunisia, tunisia lives off in many ways

off libya. i mean, the trade with libya was the highest. the volume was the highest. it was only, only the e.u. first and then, you know, libya for tunisia. there were a million and a half tourists coming from libya to tunisia, okay? you know, not only tourists, but there were also the health seekers that used to come to tunisia and so on. and i know there are people from the world bank and all and i don't dare say more about that, but i got the figures from the african development bank where how, you know, the situation in libya affected the tunisian economy. from a security perspective, the algerians were the most impacted because if you want to know the nightmare -- and, again, you speculate because no security, national security official would reveal these to you, but you can put two and two together -- but algerians are extremely fearful of having enemies surrounding

them. in other words, all borders. and right now there's an algerian/moroccan border is closed. issues with no rocca. you look attu news ya, libya, weapons are going in and out. then you have malley, and -- mali, and france wants to come back in, and the u.s. is saying -- [inaudible] so it's the worst case scenario, it's the biggest night mare. so tunisia for one thing. morocco has the bgc in power, but there is a shadow government behind the pgd. for anybody who his the p -- who thinks the pgd is rule anything morocco is a little delusional. but what happens is there is this need, basically, if you rook at the period i would say starting september/october 2011 and you see this huge movement, you know, calling for the

revival of the arab maghreb group union. we have to come together, comes to algiers and, you know, then you have a security conference of all of them, the tension between algeria and libya dissipated all of a sudden, now the libyans are not saying, you know, send us back the family of gadhafi and so on and so forth. they are signing agreements, algeria signs agreements with tunisia on the border issue, libya and algeria are working together on security issues, trying to help reconstruct and so on and so forth. unfortunately, i'm a realist in pom ticks -- politics, i'm afraid that, you know, once the storm has weathered away, the uma will regain its tradition always -- [speaking in native tongue] [audio difficulty]

or, you know, influence and so on. but i think that among, if i had to choose among the five -- >> [inaudible] >> oh, sorry. [laughter] but if there is one country that has shown really the greatest interest in reviving the uma, it's tunisia. and tunisia is for primarily, i believe, for economic reasons it needs, you know, this uma because with respect to the western sahara it has a relatively moderate position, you know, neutral, you know? white flag, you know, leave us alone. i don't mean to get into this. but i am not sure whether it's -- [inaudible] i asked about it, yes, we are for this and that, you know, for uma, etc., etc., but i think it's more a, you know, something coming from mazuki as a personal thing. but i honestly believe that if

there is one important aspect for the future of the maghreb, you know, that the maghreb is the region in the world with the least, with the lowest intraregional trade. it's less than 3%. and i think that, um, the construction or the revival of the uma on real grounds from, you know, now tunisia has what i may call the democratic legitimacy, you know, is trying to push for the reopening of the, of the uma. but i am not so certain. so we are in a situation of wait and see, and, you know, there's guarded optimism, but i am really afraid that the situation in northern mali can be a cause of concern for all the saw air rah countries -- sahara countries in the region. thank you very much. sorry about that. >> thank you. i would have loved to have heard

you continue speaking, but geoff would have never forgiven me if you went on for another minute. so -- >> sorry. >> -- geoff, the floor is yours. >> well, good morning, everyone. i want to thank you haim for inviting me down, i also want to thank csis for hosting this event. i think the timing's very opportune. there's a lot of stuff going on in north africa, and i think it's a great opportunity to have, hopefully, an in-depth discussion about it. i also want to thank my fellow panelists, dr. zoubir, dr. lawrence. jon ultimately this morning said we were the all-star team of north africa experts, right in and i appreciate the sentiment. i really, really do. but it's kind of like being, you know, an all-star ping-pong player. there's just not that many of us. [laughter]

i also, you know, i appreciate haim's comments that we are the a-team of north africa experts and in that same sort of, you know, reference, i think that dr. zoubir has to be mr. t. so i'm going to do something, i think, a little bit unusual for a conference, and what i'd like to do is game out some scenarios for where i think north africa might be heading. i don't intend them to be definitive or exhaustive, i hope they're speculative and provocative and they can serve as fuel for discussion. um, before we do that, though, you know, it's important to establish a base case. where do we think these countries in north africa are. and then from there we can project out wards to where we think they might be going, what are their trajectories. and then lastly i'd like to propose some alternate trajectories, the reasonable trajectories that analysts think these countries are on, what would be some of the circumstances tald throw them

off and present us with an alternate scenario, whether it's positive or negative. i'm going to focus primarily on algeria and libya. we have a superabundance of algeria coverage today, and i think i'm going to further contribute to that. but i'm also going to talk a little bit about libya which hasn't been addressed thus far in a whole lot of detail. i'm going to leave aside tunisia for several reasons. first of all, there was a fantastic presentation this morning. of but while we've seen tunisia served as a bellwether for political change in north africa over, since december of 2010 throughout 2011, you know, it seems that tunisia has really burnt its fuse and it's no longer serving as a catalyst for regional change. there's certainly dynamic change within tunisia itself, but the countries that surround it and the countries that may have been sort of pushed on the path of political change by tunisia are now following their own courses, and they're to longer following the path -- no longer following

the path that tunisia put them out on. likewise, i'm not going to talk about morocco. we have any number of experts in the room, dr. lawrence and mr. terrab. and also i think morocco is relatively insulated from instability, whether it's instability in libya or in northern mali. as was said this morning, morocco has such a way to adapt to and absorb political change this a relatively controlled fashion. so i'm going to leave aside morocco and tunisia, instead i'm going to focus on algeria and libya. the reason i want to focus on algeria and libya is because i know these countries better than the other two, also because i think there is an outsized potential for regional instability if different scenarios in either algeria or libya come to fruition. these are big, significant countries, and they are

intertwined with regional dynamicses in a way that morocco and tunisia aren't. so just libya with its population of six million, currently producing about 1.6 million barrels of oil a day that generates about a billion dollars in revenue per day, potential is for much higher oil and gas exports in the future. if everything proceeds in a very positive or optimistic scenario, libya could be a phenomenally rich, successful democracy on the southern shores of the mediterranean. another alternative scenario, though, is that it could be small a stone's -- somalia a stone's throw from europe. it could end up as a failed state. and i'll get into more detail about that. likewise, algeria also has huge potential. i notice there's some younger faces in the crowd or i'm getting older, but i think it's really important to emphasize how big algeria is. just to give you my usual throwaway figures, the distance from algiers to its southern border is greater than the distance from algiers to london.

it's an enormous country. likewise, the distance -- the border that algeria shares with mali is greater than the distance from new york to chicago. it's 800 miles. it's a huge territory that has to be covered. not only is algeria big, yahia mentioned it's also phenomenally wealthy, excess reserves upwards of $200 billion. hugh mentioned this morning that it also has a powerful increase in the professionalized military, and it has like libya untapped oil and gas potential. so for the moment from my perspective, algeria is potentially the key, but also the keystone for north africa. so where libya and algeria go is, i think, instrumental for regional dynamics. you know, one of the damages of algerian -- of studying algeria and libya or doing scenarios is

that there are some analytical problems. in the case of libya, you know, when the events of 2011 started, when the rebellion started in february of 2011, we found analysts here in d.c., you know, rapid ri trying to catch up -- rapidly trying to catch up and make up for lost time on libya. the reference they were drawing upon to understand political dynamics in libya were books that were written 20 years ago and based on research that had been conducted 30 years ago, and they've been scrambling to build up their knowledge base ever since. there's a similar gap about algeria, a similar misunderstanding about algeria. a lot of analysts don't travel to the country, and they generate a certain perspective on what's taking place in the country from outside of it. and that necessarily produces problems and misunderstandings. i think a good example of that in the case of algeria is the predominant understanding of why algeria did not have an arab spring. and i'm not going to belabor this. dr. zoubir covered it, dr. rockets covered it -- roberts covered it, but there

was this sense that algeria did not have a arab spring because the state performed this twofold method of carrots and sticks, of increasing salis whenever there was a protest, and this interpretation sort of denies algerians of any agency whatsoever. and the interpretation seems viable from outside of algeria, but once you travel to algeria, you get a sense that algerians didn't have an arab spring large will ri because most algerians didn't want an arab spring. there's a difference between protesting for increased salaries and protesting for a revolution. and many algerians protested because they wanted to improve their standard of living, they wanted more money from the state-owned enterprises for whom they worked, but they didn't want a revolution. and i think especially now their position has been vindicated as they see what's happening in tunisia, in egypt, as they see what's happening in libya. so just to begin with some base cases for where i think algeria

and libya are now and where we think they might be going in the future. you know, in libya 2012 was a good year. um, of after hitting every political milestone that the government had set out for itself in august 2011, they passed an electoral law. they had get out the vote campaigns. they had elections. they had swearing-in ceremonies on the date they had anticipated having them. they had the election of a congressional president. they had the election of a prime minister. but all of a sudden libya got derailed in a pretty significant way, and now we're starting to see that despite the positive events of 2012, libya's dysfunctionalty is really becoming clear. now, i'm not talking about the incident in benghazi, and i'm not talking about militias. instead what i'm talking about is the ouster of libya's new prime minister 25 days after he had been appointed by the same body that he had, that had appointed him. so on october 7th he was

dismissed, and his dismissal was arguably the product of tensions that had characterized the libyan political scene since the very beginnings of the revolution. there were regional tensions, tensions between those who had served in the gadhafi administration and those in the opposition, there were tensions between those who were in the opposition in exile and those who stayed within libya, and there were tensions amongst different ideologies. the success that libya had over 2012 made it seem as if the gnc, the general national congress, and its predecessor had overcome these tensions. but with the events of october 7th, it was pretty clear that these tensions were still a driving force in libyan political dynamics. one of the reasons -- there were numerous reasons why he got fired. among them are he didn't take into account the regionalism of libyan factions. he favored islamists over the so-called sec list bloc.

he was too harsh towards those who had worked in the gaffety administration -- gadhafi administration. and now we see the gnc is scrambling to figure out a system whereby to replace him who they themselves had elected, they're trying to figure out a system whereby to vote for the next cabinet, when they're going to approve it wholesale or vote on individual cabinet members. and what we're seeing is libya coming down from its revolutionary high, and it's crashing really high. so, and these are just the political problems. of you know, if we talk about the security problems, that opens up a whole other barrel of monkeys. you know, you've to the persistence of the militias. some of them are being incorporated by the state, or an alternate interpretation is they're infiltrating state institutions. you have some militias that have developed independent sources of income which are going to allow them to remain independent agencies for the foreseeable

future without fear of intervention by the state. so it's a very dynamic picture. where is all this heading? i think over the short term, you know, in all likelihood libya's going to stickedly to the -- stick doggedly to the road map they laid out in august 2011. they're going to drive forward to create institutions that appear to have legitimacy, but the political process is probably going to become detached from the everyday concerns of libyans. i think the gnc stands a strong chance of muddling through. they're going to appoint a cabinet, they're going to appoint a constitution which will -- a constitutional committee which will draft a constitution, and at some point they'll move ahead with elections. but i think the risk here is that in the preoccupation with the political process, the government is going to neglect other aspects of governing; health care, infrastructure, education. these are all going to fall by the wayside except, except when they serve the client interests

of members of congress or the folks that eventually get appointed as cabinet ministers. beyond all this or behind all this, the libyans are going to continue to have hydrocarbon receipts. oil companies have demonstrated that they have a tremendous risk threshold, that they're willing to put up with a huge amount of uncertainty. just think about iraq. so if libya continues to have hydrocarbon receipts, this will give libya the sense that they have the resources to address problems when they become or when they become too acute, and i think this is sort of a false comfort. i suspect that the security situation's going to remain touch and go. militias will still act with impunity, but i think in a relatively predictable manner. you know, regarding the jihadi threat in libya, and ity some of the attendees at this conference have written extensively about this, i think the jihadi threat in libya's going to remain. it's a fact on the ground for now. but at the same time, there's an

increasing awareness of the threats that jihadis pose, and the state is now going to be in a position to try and grapple with it. so while the threat will remain, it will be in a diminished capacity, and i don't think we're going to see a repeat of the devastating attacks that we saw on september 11th. is this me? oh, okay. i said i wasn't going to do this. okay. so, you know, it's not a horrible story, but it's not a great story. it's okay. um, i don't think the algeria story's a bad one either. um, you know, after the legislative elections in july 2012, the president faced a real political crisis. he was forced with having to choose a prime minister, and he was dealing with difficult party politic dynamics in the country, but at the same time there was a sense among political watchers in algeria that whoever was chosen as prime minister was going to be the opening shot in the 2014 presidential campaigns. now, whether that's true or not,

that was the popular perception. ultimately, a competent technocrat, also a staunch -- [inaudible] ally and following his appointment it's pretty clear that algeria is on the cusp of political change. and i'm sure this is going to prompt a series of questions in the discussion -- in the question and answer session. so there's two mandates; repsi the economy and prepare the country for the 2014 presidential elections. regarding his first mandate, algeria's beginning to move with the help of the minister of energy, algeria is out there actively trying to attract fdi in the hydrocarbon sector but also in other industrial sectors. he's also walking back protectionist measures. these aren't going to disappear entirely, but he is beginning to walk them back. and regarding the second mandate, the preparation of the

presidential elections in 2014, this is a much steeper challenge. you know, we talked about the popular legit maas thety of algerian political institutions, saw hall has to somehow recreate that and somehow make algerian views interested in algerian politics again, and that's a real challenge. one of the ways he's started to do that is he's started to introduce greater transparency measures, younger technocrats in different administrations up through the ranks of government and reingent some dynamism into the government bureaucracies. we've seen this in the hydrocarbon sector and ministry of foreign affairs. um, you know, one of the persistent questions about algerian politics is whether political leaders arise from within the system or come from without the system. and a related question touches upon some things that